SF's Doyle Drive deal blocked by court

TRANSPORTATION

An Alameda County judge issued a temporary restraining order Wednesday preventing Caltrans from turning construction and maintenance of part of the Doyle Drive reconstruction project over to a foreign consortium, just before the state is expected to sign the contract to enter into the public-private partnership.

A public employees union, Professional Engineers in California Government, filed a request Tuesday in Alameda County Superior Court for the temporary restraining order. It follows the Monday release of a state Legislative Analyst's Office report that calls the arrangement a bad deal, and suggests the state not sign the contract.

"The agreement does not meet all the goals Caltrans intended, and is not likely to be a good deal for the state," said Legislative Analyst Mac Taylor in a letter accompanying the report.

The temporary injunction prohibits Caltrans from signing the contract before a hearing on a permanent injunction on Dec. 30. Caltrans hopes to sign the deal before the end of the year.

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At issue is a complex financing arrangement in which the Golden Link Partners consortium would design and build the 1.6-mile second phase of the Doyle Drive replacement project, also known as the Presidio Parkway. It would also maintain it for the next 30 years. In exchange, the partnership between German construction company Hochtief and infrastructure investment firm Meridiam Infrastructure of Luxembourg would receive annual payments.

The traditional way of building highways in California involves having engineers design a project, the state seeking bids from contractors, and choosing the lowest bidder. The contractor builds the project and the state is responsible for maintenance.

Under the arrangement with Golden Link, Caltrans would pay a lump sum of $173 million when the highway opens to traffic. For the next 30 years, it would make payments estimated at $28.5 million a year, though the amount could vary based on a number of factors.

Caltrans officials estimate that the traditional method of construction would cost $635 million while the public-private partnership would run about $488 million. But the legislative analyst estimates that the traditional method would cost anywhere from $67 million to $141 million less than the Golden Link agreement, depending on bids.

The union, which represents 13,000 state engineers, sued in November to stop the deal, but the case has not yet been heard. Bruce Blanning, the union's executive director, said the arrangement violates the state law governing partnerships with private investors because Doyle Drive is not a toll road or a supplemental road as required.

According to the legislative analyst, the arrangement also fails to protect Caltrans from the risks of cost overruns and delays, a major reason for entering the partnership.

Kome Ajise, Caltrans' public-private partnership manager, disputes the legislative analyst's report, and says that the consortium is picking up responsibilities and risks not considered in the study.

"There are a whole slew of construction risks and penalties," he said, promising to respond to the report and to the Legislature.

The partnership is a good deal for California, Ajise said, citing a Caltrans study that estimated savings at 24 percent.

Construction of the $1.05 billion Doyle Drive replacement started about a year ago. The 73-year-old southern approach to the Golden Gate Bridge is rated one of the nation's most structurally unsound highways. The new approach is scheduled to open in 2013.